Enero Group Limited · ASX:EGG
Enero — FY2023 Earnings Presentation
40 slides from Enero's earnings presentation, Aug 18, 2023
Slide 1: Enero Group FY23 Results
ENERO GROUP FY23 RESULTS 18 August 2023
Slide 2: Agenda
AGENDA • FY23 highlights • Key financial metrics • Delivering on strategy • Trading update • Q&A PAGE 2
Slide 3: FY23 Highlights
FY23 HIGHLIGHTS Brent Scrimshaw CEO PAGE 3
Slide 4: Strong growth in revenue and cash flow
Strong growth in revenue and cash flow UNDERLYING RESULTS SUMMARY FY23 FY22 % Change (A$M) • Consolidated Enero Group Net Net revenue1 241.6 193.4 24.9% revenue growth of 24.9% to $241.6m benefited from a full year of Expenses (162.8) (127.2) (28.0%) acquisition contribution EBITDA1 78.8 66.2 19.1%
Slide 5: Economic interest key metrics
Economic interest1 key metrics RESULTS ON ECONOMIC INTEREST SUMMARY FY23 FY22 % Change (A$M) • Given the strong contribution of our Net revenue2 197.8 165.0 19.9% non-wholly owned subsidiary, results are also presented on an economic Expenses (151.0) (120.4) (25.5%) basis. This reflects 51% of OBMed
Slide 6: Economic interest EBITDA bridge
Economic interest1 EBITDA bridge Includes benefit of $16m of savings in Agencies and Corporate • Weaker Australian • Impact of ROI DNA • $8.5m increase in dollar had positive and GetIT from July 22 OBMedia offset by - impact of $5.1m on and disposal of $11.7m decline in Net revenue and TLE/TDE from
Slide 7: Segment results
Segment results Strong results in Creative Technology and Data with Brand Transformation impacted by challenging macro conditions SUMMARY Net revenue EBITDA EBITDA margin Creative Technology and Data (A$M) FY23 FY22 % Change FY23 FY22 % Change FY23 FY22 • Continued strong OBMedia full year Creative
Slide 8: Diversified revenue mix
Diversified revenue mix Revenue1 by industry Revenue1 by geography Agency2 revenue model Shared client revenue1 Transport, Finance Consumer Goods Airlines & Auto 3% 1% Other 3% 1% Services 7% Australia & Retainer - Health Care 2 brands Technology Asia Fixed Project 8% 28% & Telco USA 32% 47% 42% 42%
Slide 9: Responding to a Dynamic Market
RESPONDING TO A DYNAMIC MARKET Brent Scrimshaw CEO PAGE 9
Slide 10: OBMedia has grown significantly over the past 4 years
OBMedia has grown significantly over the past 4 years Track record of net revenue growth Margin and EBITDA growth Key growth drivers Strong performance of underlying search 1 advertising market (+8.9% in 20231) Expansion of OBM’s traffic sources (and 2 volume) Investment in OBM technology to improve
Slide 11: OBMedia remains focused on quality
OBMedia remains focused on quality Proactive management of traffic quality to protect our search engine partners Rebased OBM prepared for growth FY24 opportunities • OBMedia identified lower-quality traffic • Build our content monetisation business among several publishers using Google’s new Related
Slide 12: We continue to evolve Agency capabilities
We continue to evolve Agency capabilities Group Four new data and Example analytics offerings Awarded for new achievements Leading clients launched in FY23 Branding, Design and Key partner for digital Continued media through the transformation effectiveness for CX capabilities change to GA4 platform
Slide 13: We continue to win new blue-chip brands
We continue to win new blue-chip brands TECHNOLOGY HEALTHCARE CONSUMER PAGE 13
Slide 14: We reduced costs in Agencies as the market softened
We reduced costs in Agencies as the market softened We responded to softening revenue to protect margins Structural cost reductions in FY23 will continue into FY24 FY24 target agency margin range of at least 18% One-off cost reductions may return even if revenue growth remains low Structural cost re
Slide 15: Key acquisitions positioned for future growth
Key acquisitions positioned for future growth Financial performance Key FY23 initiatives Strategic outlook • H1 revenue grew 19% YoY ✓ Developed close working • Business model geared for relationship with other Enero accelerated growth when • H1 cost base geared for companies Tech ad spend returns a
Slide 16: Market dynamics confirm strategic rationale for ROI DNA and GetIT
Market dynamics confirm strategic rationale for ROI DNA and GetIT Hotwire traditionally Acquisitions widen played in a ~US$50bn Hotwire’s TAM to PR market >US$1tn Source: TAM size calculated based on WPP, IPG, OMN, Publicis and S4 Capital annual reports, various market research reports PAGE 16
Slide 17: Key Financial Metrics
KEY FINANCIAL METRICS Carla Webb-Sear CFO PAGE 17
Slide 18: Statutory profit & loss
Statutory profit & loss SUMMARY PROFIT AND LOSS SUMMARY (A$M) FY23 FY22 % Change • 24.9% year-on-year net revenue growth Net revenue 241.6 193.4 24.9% benefiting from acquisitions and strong growth in OBMedia Other income 0.1 0.3 (59.3%) • Staff costs ratio of 59% (FY22: 58%) due to Staff costs (141
Slide 19: Significant items
Significant items SUMMARY (A$M) FY23 FY22 • Fair value adjustments in FY23 relate to Fair value adjustments gains on contingent consideration true up 34.6 (1.0) due to lower earnings expectations Restructuring (3.1) - • Restructuring costs in Hotwire Group, Incidental acquisition costs (0.2) (1.3) O
Slide 20: Strong capital position
Strong capital position SUMMARY (A$M) 30 June 2023 30 June 2022 • Lower cash due to purchase of ROI DNA and GetIT on 1 July 2022 and repayment Cash 52.4 98.7 of majority of debt during FY23 Trade and other receivables 74.8 63.9 • Intangible assets and contingent consideration increase relate to ROI
Slide 21: Balance sheet & capital management
Balance sheet & capital management SUMMARY (A$M) 30 June 2023 30 June 2022 • Contingent consideration balance relates to ROI DNA and GetIT acquired in July Contingent consideration (10.1) (20.1) 2022 and MBA acquired in April 2021 Opening 1 July (at present value) • Fair value gain recognised in FY2
Slide 22: Optimising our capital position
Optimising our capital position ZERO LEVERAGE FY23 DIVIDEND PAYOUT SHARE BUYBACK Dividend payout Net Debt1 / EBITDA 42% ~520k 0.0x of NPAT Enero shares bought back (at 18 August) (excl. one-off items) 1. Net Debt includes present value of contingent consideration, but excludes lease liabilities. PAG
Slide 23: Cash flow & cash conversion
Cash flow & cash conversion SUMMARY (A$M) FY23 FY22 • Cash conversion at 102% of EBITDA , EBITDA 78.8 66.2 above target of 85% (FY22: 96%) Movement in working capital 2.7 (4.4) • Net interest payment relates to the debt draw down of $36.3m in June 2022 Equity incentive expense 2.5 1.9 • Tax payments
Slide 24: Delivering on Strategy
DELIVERING ON STRATEGY Brent Scrimshaw CEO PAGE 24
Slide 25: Focused on delivering on our strategy
Focused on delivering on our strategy A CREATIVE TECHNOLOGY COMPANY … of the most modern … specialising in the An integrated offering… marketing services … verticals that count Build deep expertise in Develop end-to-end offerings with Known as the go-to specialists in Digital, Data and AdTech, simpl
Slide 26: Enero's businesses are embracing AI
Enero’s businesses are embracing AI Our AI Content creation Data + analytics Strategic insight opportunities: • Enhanced campaign • OBM data optimisation • Using AI to accelerate creation strategic research • Using AI tools to enhance • AI tech in new data product • AI tools to enhance client projec
Slide 27: ESG progress
ESG progress FY23 FY24 ✓ ESG audit to establish a baseline • Complete the audit process by mid- FY24 ✓ Diversity, Equity, Inclusion and Belonging • Develop ESG Strategy ✓ Learning and Development • Set measurable goals to reduce environmental impact ✓ Employee Health and Wellbeing ✓ Community and In
Slide 28: Trading Update
TRADING UPDATE Brent Scrimshaw CEO PAGE 28
Slide 29: Trading update
Trading update • Trading for July remained resilient, despite ongoing challenging macroeconomic conditions with current expectations that technology clients will begin to return to more normalised trading in CY2024. • OBMedia is expected to grow from its recent rebased trading (shown on slide 11) wi
Slide 30: Enero's investment case
Enero’s investment case Delivering Portfolio Global Track record of Significant shareholder approach offering transformation growth potential returns • Deliberate strategic • Global blue-chip clients • FY20-23 Net Revenue1 • PR/Comms total • Repurchased ~520k framework with large marketing CAGR 21%
Slide 31: Q&A
Q&A Brent Scrimshaw Carla Webb-Sear PAGE 31
Slide 32: Appendix
Appendix PAGE 32
Slide 33: Reconciliation of statutory (4E) to continuing business results
Reconciliation of statutory (4E) to continuing business results Less Statutory FY23 Attributable to Economic Continuing 4E significant excluding Less Disposals (A$M) NCI Interest businesses items significant items Net revenue (statutory gross profit) 241.6 - 241.6 (43.9) 197.8 - 197.8 Other income 3
Slide 34: Reconciliation of statutory (4E) to continuing business results
Reconciliation of statutory (4E) to continuing business results Less Statutory FY22 Attributable to Economic Continuing 4E significant excluding Less Disposals1 (A$M) NCI Interest businesses items significant items Net revenue (statutory gross profit) 193.4 - 193.4 (28.4) 165.0 (1.8) 163.2 Other inc
Slide 35: EBITDA growth continues to outpace revenue growth
EBITDA growth continues to outpace revenue growth NET REVENUE - ECONOMIC INTEREST 1 (A$M) EBITDA - ECONOMIC INTEREST 1 (A$M) & EBITDA MARGIN (%) SUMMARY • ’20-23 Net revenue CAGR of 15% 250 60 30% • ’20-23 EBITDA CAGR of 22% • EBITDA margin expansion from 20% 50 25% to 24% 200 40 20% 150 93 21 22 84
Slide 36: Acquisitions' performance reflected in reduction in contingent consideration
Acquisitions’ performance reflected in reduction in contingent consideration Earnout structure for ROI DNA and GetIT Contingent consideration Earnout payments Based on Enero’s best estimate of Upfront acquisition earnings FY23 EBITDA FY24 EBITDA FY25 EBITDA at time of acquisition x x x Fair value ga
Slide 37: Segment results with constant currency
Segment results with constant currency Net Revenue EBITDA EBITDA Margin % Chg in % Chg in (A$M) FY23 FY22 % Change Constant FY23 FY22 % Change Constant FY23 FY22 Currency Currency Creative Technology 69.6 58.3 19.4% 13.5% 36.3 27.9 30.1% 21.4% 52.2% 47.9% and Data Brand Transformation 128.2 106.7 20
Slide 38: Segment results on underlying basis
Segment results on underlying basis Net Revenue EBITDA EBITDA Margin (A$M) FY23 FY22 % Change FY23 FY22 % Change FY23 FY22 Creative Technology 113.5 86.7 30.8% 68.4 49.5 38.2% 60.3% 57.1% and Data Brand Transformation 128.2 106.7 20.1% 22.1 27.8 (20.5%) 17.2% 26.0% Corporate Costs - - - (11.7) (11.1
Slide 39: Results by geography
Results by geography ECONOMIC INTEREST1 % Change in FY23 FY22 % Change (A$M) Constant Currency Net Revenue USA 102.0 59.6 71.2% 62.2% Australia and Asia 64.5 68.8 (6.3%) (6.4%) UK and Europe 31.3 36.6 (14.6%) (13.6%) Total 197.8 165.0 19.9% 16.8% EBITDA USA 42.4 30.7 38.1% 28.8% Australia and Asia 1
Slide 40: Disclaimer
Disclaimer This document has been prepared by Enero Group Except for any statutory liability which cannot be Limited (Enero) and comprises written materials/slides excluded, each of Enero, its related companies and their for a presentation concerning Enero. This is not a respective officers, employe